At least two main telecommunication companies could be excluded from applying for prized radio frequency spectrum if they do not increase their black economic empowerment shareholdings between now and April next year.
The Independent Communications Authority of SA (Icasa) aims to allocate and license additional spectrum in the 2.6 gigahertz and 800 megahertz bands by the end of April following a policy directive from Communications Minister Dina Pule, which was published in the Government Gazette last week.
Spectrum is allocated by Icasa and is in high demand to provide wireless broadband – an internet connection with a download speed of at least 200 kilobytes a second.
It is also used for wireless communication that includes television, gate remote controls and cellphone technology.
To cope with escalating demand from the proliferation of smartphones, telecoms companies need the spectrum to expand network capacity.
Vodacom South Africa and Cell C both have black ownership shareholdings below the 30 percent threshold required for Icasa’s application process.
In 2008 a then-unlisted Vodacom, majority owned by the UK’s Vodafone, sold 6.25 percent of its shares to historically disadvantaged individuals (HDIs) for R7.5 billion to comply with the draft information and communication technology (ICT) charter at the time.
Empowerment consortium CellSAf owns 25 percent of Cell C, which is controlled by Saudi Arabia’s Oger Telecom.
In addition to Vodacom and Cell C, industry players including MTN, Internet Solutions, Neotel and Altech Technology Concepts have indicated their interest in the spectrum.
The industry is also guided by the codes of good practice on broad-based black economic empowerment (BEE), which set a black ownership target of 25 percent plus one vote.
Under the codes, foreign-owned companies are measured against 25 percent of the value of their South African operations.
Icasa spokesman Paseka Maleka declined to comment yesterday on what provisions Icasa had made for companies, especially foreign-owned, that fell short of the requirements.
Maleka said: “The authority will have to take a decision when we deal with the applications… Anyone who does not meet the requirements will not get a piece of the spectrum.”
Vodacom declined to comment and said it was still studying documents from Icasa.
Last year, the TechCentral website reported that Vodacom was weighing up a deal worth about R20bn to sell a 23.75 percent stake in anticipation of the spectrum allocation.
Cell C also declined to comment on its plans to address the BEE shortfall.
Executive head of regulatory affairs Mothibi Ramusi said: “Cell C respects the requirement of 30 percent HDI and will meet any requirements set out in the ITA (invitation to apply) when the process gets under way.”
Listed companies face an extra hurdle, in that they must also satisfy the JSE requirement of a minimum free float of 20 percent.
The draft ICT charter calls for 30 percent black ownership. Department of Trade and Industry spokesman Sidwell Medupe expected the charter to be implemented by March. - Asha Speckman